Government set to lose millions due to rapid increment of alcohol taxes

Apr 26, 2017 |

By Namugerwa Martha

Government is set to lose a large amount of money trough taxes ahead of this new financial year that starts in July due to the increment of alcohol taxes which will affect its revenue targets.

Greg Metcalf, the outgoing managing director of Nile Breweries has warned that the more taxes inflicted on beers could adversely hurt the growth of the industry.

Metcalf said that the government has mooted the idea of a 15 percent tax increase on beer.

“The government has invited all Uganda Breweries and announced that they intend to increase taxes on beer and alcohol which is our biggest fear in the year coming ahead on how will the industry cope with this taxation?” Metcalf said.

Metcalf also added that the industry will have to make a choice whether the taxes will be passed on to the prices or the industries and try to absorb it which is hard to absorb a15 percent increment.

“If beer prices go up, fewer people will buy it which will in turn affect the revenue targets of government,” Metcalf added.

Metcalf further added that if the government increases tax by 15 percent, volumes could fall by 20 percent and if you do the mathematics you will realize that the government could make less money.

“Does a consumer have enough money not to worry about the increase in beer price by sh500 or does he go back to the illicit alcohol?” Metcalf asked.

Metcalf is stepping away from the business he has spearheaded since 2014.